Pride Manufacturing Company, LLC v. Evolve Golf, Inc.
Filing
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MEMORANDUM. Signed by Judge Sue L. Robinson on 10/31/2016. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
PRIDE MANUFACTURING COMPANY, )
LLC
)
)
Plaintiff,
v.
)
)
)
Civ. No. 15-1034-SLR
)
EVOLVE GOLF, INC.,
Defendant.
)
)
)
MEMORANDUM
At Wilmington this :i\vir day of October, 2016, having reviewed the motion to
dismiss for lack of subject matter jurisdiction (D.I. 14) filed by defendant Evolve Golf,
Inc. ("Evolve"}, and the motion for declaratory judgment of non-infringement (D.I. 12)
filed by plaintiff Pride Manufacturing Company, LLC ("Pride"), and the papers filed in
connection therewith; the court issues its decision based on the following reasoning:
1. Background. On November 9, 2015, Pride brought an action for declaratory
judgment of non-infringement and invalidity of U.S. Patent No. D502,972 ("the "972
patent") and U.S. Trademark Registration No. 3280419 ("the "419 mark") against
Evolve. (Id.
at~
1) On February 24, 2016, Evolve answered the complaint, asserted
counterclaims of trademark infringement, and unequivocally admitted that Pride's golf
tees do not infringe the '972 patent. (D.I. 6
at~~
11, 20) Responding to Pride's
concerns regarding Evolve's admission of non-infringement, Evolve sent Pride a release
and covenant not-to-sue. (D.I. 17, 20) Presently before the court is Evolve's motion to
dismiss for lack of subject matter jurisdiction and Pride's motion for declaratory
judgment of non-infringement. (D.I. 12, 14) The court has jurisdiction pursuant to 28
U.S.C §§ 1331 and 1338(a).
2. Pride is a Delaware limited liability company with its principal place of
business in Brentwood, Tennessee. (D.I. 1 at~ 2) Evolve is a Delaware corporation
with its principal place of business in Carolina Shores, North Carolina. (Id.
at~
3)
3. The '972 patent is a design patent for an ornamental design of a golf tee. The
drawings depict four raised posts to hold the golf ball. (D.I. 1, exhibit B) Pride received
a demand letter from Evolve dated July 21, 2015 (the "July 21 letter") stating Pride was
selling and market[ing] nearly identical golf tees under the mark EVOLUTION ...
. Like Evolve's tees, your EVOLUTION-branded tees are a composite tee which
feature four raised posts that hold the ball to reduce friction. Like Evolve's tees,
your EVOLUTION-branded tees feature colored stripes on the shaft to indicate
the perfect tee height. As such, your product appears virtually identical to
Evolve's golf tees.
(Id.
at~
6) The July 21 letter further stated that customers were confused between the
two products due to the design similarities, and that Pride infringed on Evolve's
intellectual property, specifically the '972 patent and the '419 mark. (Id.
at~
7, 8) The
July 21 letter concluded with a demand for Pride to stop using the EVOLUTION mark
and the four-post golf tee design. (Id.
at~
for Pride maintaining its demands. (Id.
9) Evolve sent a follow-up letter to counsel
at~
14)
4. Standard. Not only may the lack of subject matter jurisdiction be raised at
any time, it cannot be waived and the court is obliged to address the issue on its own
motion. Cisco Sys., Inc. v. Sprint Commc'ns Co., L.P., 2016 WL 690939, at *1 (D. Del.
Feb. 19, 2016); see also Moodie v. Fed. Reserve Bank of N. Y., 58 F.3d 879, 882 (2d
Cir. 1995). Once jurisdiction is challenged, the party asserting subject matter
jurisdiction has the burden of proving its existence. See Carpet Group Int'/ v. Oriental
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Rug Importers Ass'n, Inc., 227 F.3d 62, 69 (3d Cir. 2000). Under Rule 12(b)(1), the
court's jurisdiction may be challenged either facially (based on the legal sufficiency of
the claim) or factually (based on the sufficiency of jurisdictional fact). See 2 James W.
Moore, Moore's Federal Practice§ 12.30[4] (3d ed.1997). Under a facial challenge to
jurisdiction, the court must accept as true the allegations contained in the complaint.
See id. Dismissal for a facial challenge to jurisdiction is "proper only when the claim
'clearly appears to be immaterial and made solely for the purpose of obtaining
jurisdiction or ... is wholly insubstantial and frivolous."' Kehr Packages, Inc. v. Fidelcor,
Inc., 926 F.2d 1406, 1408-09 (3d Cir. 1991) (quoting Bell v. Hood, 327 U.S. 678, 682
(1946)).
5. Under a factual attack, however, the court is not "confine[d] to allegations in
the ... complaint, but [can] consider affidavits, depositions, and testimony to resolve
factual issues bearing on jurisdiction." Gotha v. United States, 115 F.3d 176, 179 (3d
Cir. 1997); see also Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891-92
(3d Cir. 1977). In such a situation, "no presumptive truthfulness attaches to plaintiff's
allegations, and the existence of disputed material facts will not preclude the trial court
from evaluating for itself the merits of jurisdictional claims." Carpet Group, 227 F.3d at
69 (quoting Mortensen, 549 F.2d at 891 ).
6. The Declaratory Judgment Act requires an actual controversy between the
parties before a federal court may exercise jurisdiction. 28 U.S.C. § 2201 (a). An action
for declaratory judgment must have an actual controversy existing by a preponderance
of the evidence. Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 887 (Fed. Cir. 1992). An
actual controversy is determined by whether "the facts alleged, under all the
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circumstances, show that there is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment." Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)
(quoting Maryland Gas. Co.
v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). An
"adverse legal interest" necessitates a dispute regarding a legal right, such as "an
underlying legal cause of action that the declaratory defendant could have brought or
threatened to bring." Arris Grp., Inc. v. British Telecommunications PLC, 639 F.3d
1368, 1374 (Fed.Cir.2011). This is not a bright-line test. See, e.g., Maryland Gas., 312
U.S. at 273; Sony Elecs., Inc. v. Guardian Media Techs., Ltd., 497 F.3d 1271, 1283
(Fed. Cir. 2007).
The Supreme Court has recognized this standard of review will
necessarily be fact specific and takes into account all of the relevant circumstances.
See Medlmmune, 549 U.S. at 127; Cisco Sys., Inc.
v. Sprint Commc'ns Co., L.P., No.
CV 15-431-SLR, 2016 WL 690939, at *1-2 (D. Del. Feb. 19, 2016).
7. Analysis. A covenant not-to-sue deprives the court of declaratory judgment
jurisdiction relating to claims addressed by the covenant. See Amana Refrigeration,
Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999); Super Sack Mfg. Corp. v.
Chase Packaging Corp., 57 F.3d 1054, 1060 (Fed. Cir. 1995); Boston Scientific Corp. v.
Johnson & Johnson Inc., 679 F. Supp. 2d 539, 544 n.5 (D. Del. 2010). As determined
in Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278 (Fed. Cir. 2008), "[a]
covenant not-to-sue eliminates any reasonable apprehension of suit ... [of a] patent. If
a threat of suit was the only action allegedly taken ... that effectively excluded [the
competitor] from the marketplace, the covenant not-to-sue would moot [the competitor's]
case and divest the district court of Article Ill jurisdiction." Id. at 1296.
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8. Evolve's covenant not-to-sue (as the court reads the document) protects Pride
from the threat of future litigation for infringement of the '972 patent by any products that
Pride made, used, sold, offered for sale, or imported into the United States on or before
May 5, 2016. To put the point another way, by its covenant not-to-sue, Evolve cannot
sue Pride for patent infringement based on any existing (on or before May 5, 2016)
products. The court is satisfied that, despite the covenant's lack of any specific product
descriptions, the covenant meets the purpose of removing any concern of liability for
infringement of the patent currently in suit. See Merck & Co. v. Apotex, 488 F. Supp. 2d
418 (D. Del. 2007), aff'd in part, vacated in part, 287 F. App'x 884 (Fed. Cir. 2008).
Evolve's motion for lack of subject matter jurisdiction is granted in this regard.
9. The dismissal of a claim, however, does not automatically resolve the entire
case or controversy. Helios Software, LLC v. SpectorSoft Corp., No. CV 12-081-LPS,
2014 WL 4796111, at *11 (D. Del. Sept. 18, 2014), on reconsideration in part, No. CV
12-81-LPS, 2015 WL 3622399 (D. Del. June 5, 2015). At bar, a controversy still exists
regarding the trademark infringement claims and counterclaims.
10. Conclusion. For the foregoing reasons, Evolve's motion to dismiss for lack
of subject matter jurisdiction (D.I. 14) is granted. Pride's motion for declaratory judgment
of non-infringement (D.I. 12) is denied as moot. An appropriate order shall issue.
k&~
United StateSiStriciJUdge
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